By Navigating through long-term disability can be overwhelming. There are a lot of aspects that you need to pay close attention to. It is easy to be daunted by the whole process. It is always best to have an AvaGio Long Term Disability Lawyer by your side. They will help you to understand long-term disability and navigate you through the process. They will provide you with all the answers that you need and help you whenever needed. When you are a recipient of long-term disability, you might wonder whether they are taxable or not. Read on to know more about it.
Can Income Tax be applied to Disability Benefits?
Long-term disability benefits are also subjected to the rules of the tax system. There are different rules in place which are applied based on the type of benefit, who pays the premium and the annual taxable income of the person. Several sources provide long-term disability benefits. It includes El sickness which is temporary. Disability insurance plans, Ontario Support Program and Canada Pension Plan Disability are some of the common sources of long-term disability benefits. To understand how taxes work, one needs to look into each case. Hence, having a lawyer by your side who understands all of this would be able to answer all your questions.
Can Employment Insurance (EI) Sickness benefits be taxed?
Canada’s employment insurance program provides up to 15 weeks of financial assistance to people who are unable to work due to sickness or injury. However, this program applies when the person has exhausted all of their sick days and is unable to return to work because their health doesn’t allow them to. All EI benefits are taxable. Before you receive the amount, Federal and provincial taxes are deducted from it. If your income exceeds a certain amount, you might be expected to repay some of your benefits when filing your taxes.
Are Employer-Paid Premiums taxable?
The compensation that one receives from their employers like the wages, salaries and bonuses, are taxed. Insurance premiums are one of the few compensations which are not taxed. The employee doesn’t pay taxes on the premiums paid by the employer, which provide a group cover on long-term disability. However, when the employee receives these benefits it is considered to be a taxable income.
When you are the one who is paying the insurance premium, then the premium is collected after the taxes. You will not be able to reduce the income tax by simply reducing the amount which is paid for the group long-term disability insurance, as they aren’t considered to be taxable income at that time. When unsure about who paid your premium, your insurance provider will help you out with the information.
Reach out to a lawyer
Taxes can be extremely confusing, especially when you are suffering from a long-term disability. The taxes for each case is unique. The lawyer will explain to you how the taxes would work and whether your income is taxable by law or not.
